CSW System Special Executive Retirement Plan

SPECIAL EXECUTIVE RETIREMENT PLAN



(As Amended and Restated Effective January 1, 2009)



ARTICLE I

Purposes and Effective Date



1.1 Purpose . The Central and South West System Special Executive Retirement Plan is an unfunded, nonqualified deferred compensation plan maintained to provide certain benefits for eligible employees whose retirement benefits from the Retirement Plan (as defined below) are restricted due to limitations imposed by provisions of the Internal Revenue Code or who are entitled to supplemental benefits under the terms of an employment agreement between the eligible employee and a Participating Employer.



1.2 Effective Date . The Plan originally was adopted by Central and South West Corporation in 1979. It later was amended and restated effective as of July 1, 1997. This Plan is now amended and restated effective as of January 1, 2009, except as otherwise provided.



ARTICLE II

Definitions



The following terms shall have the meanings set forth in this Article II. Any undefined capitalized term in this Plan shall have the meaning set forth in the Retirement Plan.



2.1 " Accredited Service " means the period of time taken into account under the terms of the Retirement Plan for the purpose of computing a Retirement Plan benefit under the Final Average Pay Formula.



2.2 " Actuarial Equivalence " or " Actuarially Equivalent " will be determined using the assumptions and methods that are used in connection with the Cash Balance Formula under the Retirement Plan, regardless of whether the benefits under this Plan are determined under the Cash Balance Formula.



2.3 " Administrator " means American Electric Power Service Corporation.



2.4 " Base Compensation " means a Participant's regular base salary or base wage Earned through the date of the termination of employment of the Participant with the Participating Employers. Base Compensation shall be determined (i) without adjustment for any salary or wage elections made pursuant to Sections 125 (regarding cafeteria plans, including pre-tax contributions for premiums and flexible spending accounts) and 402(e)(3) (regarding elective deferrals, including before-tax contributions under a Section 401(k) retirement savings plan) of the Code, (ii) without reduction for any contributions to the Supplemental Savings Plan; and (iii) excluding bonuses (such as, but not limited to, project bonuses and sign-on bonuses), compensation paid pursuant to the terms of an annual compensation plan, performance pay awards, severance pay, relocation payments, or any other form of additional compensation that is not part of regular base salary or base wage.



2.5 " Beneficiary " means the person or entity designated in accordance with the provisions of Section 7.3, to receive the distribution of death benefits provided for in Article VII.



2.6 " Board of Directors " means the Board of Directors of the Company.



2.7 " Cash Balance Formula " means the formula under the Retirement Plan by which Participants accrue benefits through credits to his or her Cash Balance Account (as defined in the Retirement Plan). The Cash Balance Formula is effective beginning July 1, 1997.



2.8 " Cash Balance Unrestricted Benefit " means the Unrestricted Benefit calculated using the Cash Balance Formula.



2.9 " Code " means the Internal Revenue Code of 1986, as amended from time to time.



2.10 " Committee " means the committee designated by the Administrator (or a person duly authorized to act on behalf of the Administrator) as responsible for the administration of the Plan.



2.11 " Company " means AEP Utilities, Inc., a Delaware corporation (formerly know as Central and South West Corporation).



2.12 " Corporation " means American Electric Power Company, Inc., a New York corporation, and its affiliates and subsidiaries.



2.13 " Determination Date " means the first day of the month immediately following the Participant's Termination; provided, however, with respect to Participants who have already separated from service but have not yet received a distribution under the Plan as of December 1, 2008, the Determination Date shall be the date specified in accordance with Article VI for the commencement date for payment of his or her Special Retirement Benefit.



2.14 " Employee " means such persons employed by a Participating Employer who are designated in the records of the Participating Employer in a classification that is eligible to participate in the Retirement Plan.



2.15 " Employment Contract " means an agreement between a Participating Employer and an Employee that provides the Employee with a non-qualified retirement benefit attributable to this Plan.



2.16 " ERISA " means the Employee Retirement Income Security Act of 1974 as amended from time to time.



2.17 " First Date Available " or " FDA " means (a) with respect to a Participant who is a Key Employee as of the date of such Participant's Termination, the first day of the month next following the date that is six (6) months after the Participant's Termination; (b) with respect to Participants who have already separated from service but have not yet received a distribution under the Plan as of December 1, 2008, the date specified in accordance with Article VI for the commencement date for payment of his or her Special Retirement Benefit (or, if such Participant fails to specify such a date, January 1, 2009); and (c) with respect to all other Participants, the first day of the month next following the Participant's Termination.



2.18 " Grandfathered Participant " means a Participant who (i) is an employee of a Participating Employer on July 1, 1997, and (ii) has both attained age 50 and completed at least ten years of vesting service under the Retirement Plan on such date.



2.19 " HR Committee " means the Human Resources Committee of the board of directors of the Corporation (or any successor to such committee).



2.20 " Incentive Compensation " means incentive compensation Earned pursuant to the terms of an annual incentive compensation plan, provided that Incentive Compensation shall not include non-annual bonuses (such as but not limited to project bonuses and sign-on bonuses and amounts earned under a long-term incentive plan), severance pay, relocation payments, or any other form of additional compensation that is not considered to be part of Base Compensation.



2.21 " Key Employee " means a Participant who is classified as a "specified employee" at the time of Termination in accordance with policies adopted by the HR Committee in order to comply with the requirements of Section 409A(a)(2)(B)(i) of the Code and the guidance issued thereunder.



2.22 " Maximum Benefit " means the vested retirement benefit payable from the Retirement Plan under either a Prior Plan Formula or the Cash Balance Formula, as provided in Article IV and Article V and as calculated based upon the Participant's marital status, Beneficiary, credited service, and earnings for services rendered to the Company, to the extent such are permitted by the Code and the Retirement Plan to be taken into account under the Final Average Pay Formula or the Cash Balance Formula, as applicable.



2.23 " Maximum Disability Period " means the last date any disability benefits may become payable under the terms of the American Electric Power System Long-Term Disability Plan in effect as of the later of December 31, 2008 or the last day on which the Participant's initial payment election may be made in accordance with Section 6.3.



2.24 " Next Date Available " or " NDA " means the July 1 of the calendar year immediately following the calendar year in which falls the Participant's Termination.



2.25 " Participant " means any exempt salaried Employee of a Participating Employer who has entered the Plan in accordance with Article III of this Plan and has accrued a benefit under the Plan.



2.26 " Participating Employer " means the Company and each subsidiary of the Corporation that is a participating employer under the Retirement Plan.



2.27 " Plan " means the Central and South West System Special Executive Retirement Plan, as amended and in effect from time to time.



2.28 " Plan Year " means the calendar year commencing each January 1 and ending each December 31.



2.29 " Premium Pay " means overtime pay and shift differential pay that is Earned during the relevant time period, but that is not a part of the Participant's Base Compensation or Incentive Compensation.



2.30 " Prior Plan Formula " means the Career Average Pay Formula or the Final Average Pay Formula under the Retirement Plan.



2.31 " Retirement Plan " means the Central and South West System Cash Balance Retirement Plan sponsored by the Company, as amended and restated effective July 1, 1997, and as further amended and in effect from time to time, which is a defined benefit pension plan intended to qualify under Section 401(a) of the Code.



2.32 " Special Retirement Benefit " means the basic retirement benefit determined under Article IV of this Plan.



2.33 " Termination " means termination of employment with the Company and its subsidiaries and affiliates for any reason; provided that effective with respect to Participants whose employment terminates on or after January 1, 2005, determinations as to the circumstances that will be considered a Termination (including a disability and leave of absence) shall be made in a manner consistent with the written policies adopted by the HR Committee from time to time to the extent such policies are consistent with the requirements imposed under Code 409A(a)(2)(A)(i).



2.34 " Unrestricted Benefit " means the vested retirement benefit that would be payable from the Retirement Plan under either a Prior Plan Formula or the Cash Balance Formula, as described in Article IV and Article V, assuming Sections 401(a)(17) (Compensation Limit) and 415 (Limitation on Benefits) of the Code are not applicable. The calculation of the Unrestricted Benefit also shall take into account other adjustments specified in an Employment Contract.



ARTICLE III

Participation in the Plan



3.1 Eligibility . All exempt salaried Employees of a Participating Employer shall be eligible to participate in this Plan so long as such Employee is either (A) entitled to a Special Retirement Benefit under the terms of an Employment Contract, or (B) both (1) a participant in the Retirement Plan, and (2) satisfies one of the following conditions below:



(a) The Employee's Base Compensation for the current or any prior Plan Year exceeds the limitation of Section 401(a)(17) of the Code,


(b) The Employee was a Participant in this Plan as of July 1, 1997, or


(c) The Employee's Base Compensation plus Incentive Compensation plus Premium Pay for the current or any prior Plan Year (that ends on or after July 1, 1997, in that such amounts were taken into account for the calendar year 1997 in calculating the opening balance for Participants under the Cash Balance Formula) exceeds the limitation of Section 401(a)(17) of the Code.


All such eligibility determinations generally shall be made by December 31 of each year or such other time as set forth in an Employee Contract.


3.2 Duration . An Employee who becomes a Participant shall continue to be a Participant until his or her Termination or the date he or she is no longer entitled to receive a Special Retirement Benefit under this Plan.



ARTICLE IV

Primary Benefit



4.1 General Benefits . Upon a Participant's Termination, the Participant shall be entitled to a Special Retirement Benefit calculated as of the Participant ?s Determination Date, as determined under this Article IV, to the extent vested, to be paid at the time and in the form determined in accordance with Article VI of this Plan. Except as otherwise specified in Article X, a Participant's Special Retirement Benefit shall become vested at the same time and to the same extent as may be provided under the terms of the Retirement Plan. Notwithstanding the foregoing, the amount, calculation methodology, or vesting of a Participant's Special Retirement Benefit may be reduced or otherwise modified in the manner described in an Employment Contract. Additionally, if the Committee determines that a Participant has incurred a liability to, or otherwise damaged, the Corporation, the Company or any Participating Employer, the Committee shall have the authority and power, in its sole discretion, to reduce any portion or all of the amounts that might otherwise become payable to such Participant under the terms of this Plan by the amount of such liability or damage, as reasonably determined by the Committee.



4.2 Calculation Methodology . For purposes of calculating the Special Retirement Benefit under Sections 4.3, 4.4 and 4.5 of this Plan, the following rules shall apply.



(a) To the extent a Participant's form of benefit under Article VI is a lump sum or installments, this calculation shall be based on the lump sum of the Unrestricted Benefit and Maximum Benefit. To the extent a Participant's form of benefit under Article VI is an annuity, this calculation shall be based on the single life annuity value of the Unrestricted Benefit and Maximum Benefit. If a Participant ?s form of benefit under Article VI is a combination lump sum distribution and life annuity [as set forth in Section 6.2(b)(5)], both calculations shall be made and the appropriate elected percentage applied to each.


(b) For purposes of calculating the Unrestricted Benefit using the Cash Balance Formula under Sections 4.3, 4.4, 4.5 and 5.2, and for purposes of calculating the Pension Equity Floor under Article V, annual Compensation taken into account shall be limited to the greater of $1,000,000 or 200% of the Participant's Base Compensation in effect on the last day of each applicable Plan Year (or if earlier, the date of Termination).


4.3 Amount of Benefit for Cash Balance Participants . A Participant in this Plan whose Retirement Plan benefit takes into account only the Cash Balance Formula shall be entitled to receive a benefit equal to the excess (if any) of the benefit calculated under paragraph (a) below over the benefit calculated under paragraph (b) below.



(a) The Unrestricted Benefit calculated using the Cash Balance Formula.


(b) The Maximum Benefit calculated using the Cash Balance Formula.


4.4 Benefits for Non-Grandfathered Prior Plan Formula Participants .



(a) Eligibility . If the following conditions are satisfied, a Participant shall receive the benefit described in Section 4.4 instead of the benefit calculated under Section 4.3.


(1) The Participant accrued a benefit under this Plan as of July 1, 1997; and


(2) The Participant is not a Grandfathered Participant.


(b) Amount of Benefit . The benefit under this Section 4.4 is equal to the excess, if any, of the benefit determined under paragraph (1) below over the benefit determined under paragraph (2) below:


(1) The greater of (a) the Unrestricted Benefit the Participant had accrued as of July 1, 1997, using the Prior Plan Formula, or (b) the Unrestricted Benefit calculated using the Cash Balance Formula.


(2) The greater of (a) the Maximum Benefit the Participant had accrued as of July 1, 1997, using the Prior Plan Formula, or (b) the Maximum Benefit calculated using the Cash Balance Formula.


4.5 Benefit for Grandfathered Participants .



(a) Eligibility . A Grandfathered Participant will receive the benefit in either Section 4.5(b) or 4.5(c) as applicable.


(b) Lump Sum or Installment Benefits . To the extent a Participant is to receive his or her benefits under this Plan in the form of a lump sum or installments, the benefit under this Section 4.5(b) is equal to the excess, if any, of the benefit determined under paragraph (1) below over the benefit determined under paragraph (2) below.


(1) The greater of (a) the Unrestricted Benefit calculated using the Prior Plan Formula, or (b) the Unrestricted Benefit calculated using the Cash Balance Formula.


(2) The greater of (a) the Maximum Benefit calculated using the Prior Plan Formula, or (b) the Maximum Benefit calculated using the Cash Balance Formula.


(c) Annuity Benefit . To the extent a Participant is to receive his or her benefits under this Plan in the form an annuity, the benefit under this Section 4.5 (c) is the annuity benefit described in paragraph (1) or (2) below, whichever has the greater Actuarially Equivalent value. Each annuity benefit will be valued at Termination by comparing the annuity payable in the normal form under the Retirement Plan assuming that payments will commence on the Determination Date. The value of any annuity benefit payable that includes a cost of living adjustment shall be determined assuming that the future cost of living adjustments will be three percent (3%) per year.


(1) The excess, if any, of the Unrestricted Benefit calculated using the Prior Plan Formula over the Maximum Benefit calculated using the Prior Plan Formula.


(2) The excess, if any, of the Unrestricted Benefit calculated using the Cash Balance Formula over the Maximum Benefit calculated using the Cash Balance Formula.


4.6 Disability Accruals . Notwithstanding anything in the Plan to the contrary, if a Participant incurs a Disability (under the terms of the Retirement Plan), the Participant may continue to accrue a benefit under this Plan from the date of such Disability through the Maximum Disability Period to the extent the Participant is receiving such disability accruals under the Retirement Plan, as paid in accordance with Section 6.6.



ARTICLE V

Pension Equity Floor

(formerly called the "Final Average Pay Cash Balance Benefit")



5.1 Eligibility -- Cash Balance Participants . Only Participants who were identified as of Ma ...